Contracts for new, single-family home sales in the US inched down -0.7% in September to a 701,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau.
The decline came off a downwardly revised August estimate, which was decreased from an initial reading of 713,000 to a new estimate of 706,000.
Year-over-year, the September 2019 estimate is +15.5% higher. Sales in September continue strength supported by lower mortgage rates.
About 15% of newly built home sales are priced under US$200,000 in September, compared to 10% last month and 9% one year ago.
While more affordable entry-level homes were sold in September, the number of new homes priced above US$400,000 decreased.
Total sales for the first nine months of 2019 (527,000) were 7.2% higher than the comparable total for 2018 (491,000). We expect sales volume to continue to trend up slightly in the coming months as more new homes are built.
Compared to last month, inventory of new homes for sale declined -0.6% to 321,000 in September. It is the fourth straight decline since June 2019. The current months’ supply stands at a balanced level of 5.5.
The “distressing gap” graph below, by Calculated Risk, shows existing home sales (left axis) and new home sales (right axis) through September 2019. This graph starts in 1994, but the relationship had been fairly steady back to the ’60s.
Following the housing bubble and bust, the “distressing gap” appeared mostly because of distressed sales. Even though distressed sales are down significantly, following the bust, new home builders focused on more expensive homes – so the gap has only closed slowly.
Calculated Risk expects this gap to close. However, this assumes that the builders will offer some smaller, less expensive homes.
Annual US new home sales in 2019 should be the best year for new home sales since 2007.
Median new home sales price dropped -7.9% in September to US$299,400 compared to August (US$325,200), and -8.8% lower than a year ago (US$328,300).
Median new home sales price dipped below US$300,000 for the first time since May 2016.